Friday, September 20, 2019
Using Hustle As A Cogent Business Strategy Business Essay
Using Hustle As A Cogent Business Strategy Business Essay Amar Bhides article, Hustle as Strategy (1986) describes how in industries where competitive advantage can be quickly imitated, the importance is placed on superior execution rather than superior planning. This is demonstrated throughout the article in the financial services industry. This essay firstly explores how Hustle as Strategy fits into the strategy debate, as well as considering the underlying assumptions the author makes about organisations and the environment. It provides an analysis of the article and the emergent approach to strategy. The field of strategy, particularly the prescriptive approach was formed due to the perceived need to reduce uncertainty in organisations (Downs et al 2003:81). Prescriptive strategy is discussed as long term planning, creating clear, articulated intentions and then endeavouring to implement them (Faulkner, 2002). Porter (1979) wrote that organisations should position themselves in the market by evaluating their external environment and creating competitive advantage by differentiating from competitors. However, as the business environment becomes more competitive and unpredictable, a new emergent approach to strategy formed (Figure 1). Accepting that uncertainty is here to stay, Eisenhardt and Brown (1998, p.787) suggest that strategy becomes successfully navigating at the edge of chaos and anarchy. Bhide (1986) uses the example of the financial services industry to demonstrate the need for emergent strategy over fixed plans. The article focuses on the financial industry but includes strategic comparisons with industries such as motoring. Chaffee (1985, p.202) comments that strategies must be situational and accordingly it will vary by industry. Eisenhardt and Brown (1998:787) suggest that in many industries, change is happening too fast for static strategy to be effective. Therefore, strategy formulation has become an exercise of trial, experimentation and discussion (Downs et al, 2003:5) with the emphasis on action rather than planning. Bhide (1986:61) agrees with this by suggesting that financial services companies have to earn their wings everyday because a successful strategy today may not work tomorrow (Eisenhardt and Brown, 1998:787). The author dismisses the traditional, prescriptive school of thought for this industry by explaining that due to the infungible nature of the financial products, they can be quickly imitated. It is suggested there is no steady stream of new opportunities available and so companies should focus doing their best to minimise failure. Bhide (1986:62) suggests that strategy should be like a game of poker, not chess, where financial companies focus on tactics and execution rather than erecting massive barriers to competitors (p.59). Bhide (1986:60) quotes Warren Buffett in saying that major sustainable competitive advantages are almost non-existent in the field of financial services. Financial services companies do not have a monopoly on good product ideas; therefore they need to secure customers by executing ideas better than their competitors. However, Porter (1996) disagrees by suggesting that having operational effectiveness is not enough for organisations and that these tactics result in some companies outlasting others, but provide no real advantage in the market. Bhide (1986) recognises that financial services companies need to implement a review system in order to not be irresponsible. He writes that financial companies need to review their performance and continually assess the risks. Whittington (2001:24) supports this idea by suggesting that organisations with an emergent strategy need to have enough structure to allow patterns to emerge, but not so much that it causes inflexibility and cost. It can be said that emergent strategy is not about the absence of authority, it is about finding better ways of doing things. It is the job of management to bolt together the daily actions of the organisation to provide a direction for the organisation rather than to provide a rigid plan of expectations. Hustle as Strategy is underpinned by several assumptions about the environment and organisations. These assumptions are formed based of the authors acceptance of the world as a chaotic and uncertain place. Due to the unpredictable nature of the environment the assumption is that new opportunities open up for organisations. A key assumption of the article is that organisations are able to adapt quickly to take advantage of the new opportunities. Bhide (1986:62) assumes this by writing that in order to consistently win in the market, a company must be able to quickly vary tactics to suit conditions. This is supported by Noe et al (2003, as cited in Downs et al 2003:7) who discuss how emergent strategies rely on the ability of an organisation to learn. Mintzberg (1978) suggests that a strategy emerges by developing patterns in actions over time, this could be said to be a form of organisational learning. A learning organisation is described by Johnson et al (2005) as one that has the continual capability to regenerate from the variety of knowledge, experience and individual skills within the culture. This process is said to occur from within the organisation and therefore the strategies emerge from within. It is said that the organisation should unlock the knowledge of individuals by sharing information and allowing them to become more sensitive to changes occurring around them. This assumption is also supported by Stacey (1996:188) who discusses the view of organisations as complex adaptive systems. It is suggested that organisations learn their way into an open- ended evolutionary space that can create their futures. Stacey also suggests that individuals in the organisation are agents in the system; therefore their behaviour in the system can ultimately impact the ability of the organisation to adapt. This leads to the second assumption of the article. Bhide (1986:60) assumes that their employees will quickly be able to adjust their tactics by suggesting that a financial institutions employees are a potentially versatile resource. The author writes that employees working in operations play a pivotal role in the success of other areas of the business. Therefore, the process of recruiting hustlers is an important activity. Organisations with emergent strategy are looking for employees that can revolutionise processes and therefore must encourage a culture that embraces change. This emphasis on human capital can be likened to the resource-based theory of strategy where the focus in put on the application of the valuable resources at the firms disposal (Barney, 1991). It can be argued when companies have similar resources to hand, but differing performance, that one company is utilising its resources better than the others. In a knowledge-based economy, the knowledge and skills of the workforce are an intangible resource that is difficult to be imitated by competitors. Prahalad and Hamel (1990) argue that they help to create core competencies that in turn gain competitive advantage. As a result, if employees have to adjust their tactics and become more flexible then the assumption is that management are willing to give their employees more responsibility for decision making. The organisation needs to be de-centralised; otherwise the speed of change is hindered by levels of bureaucracy. Allowing employees more responsibility means that those closest to the customers are more likely to develop practical and realistic ideas for success. It is possible to find strengths and weaknesses of the article and the wider debate of emergent strategy. Firstly, considering Hustle as Strategy, it is a strong example of emergent strategy in a prominent industry. It provides an insight into how strategy is formulated by organisations and has useful comparisons with alternative industries in order to clearly demonstrate the support for this strategy debate. It uses examples and quotes from successful organisations; however it does not detail how organisations may approach this kind of strategy unsuccessfully. A second strength of the article is that the authors assumptions are based on already widely discussed and generally accepted ideas about organisations and the environment. There is a wealth of theory available to back up claims and assumptions made. However, a weakness of the article is that the article focuses entirely on the emergent strategy. It has been argued by strategists that in fact, organisations are not perfectly prescriptive or perfectly emergent, but usually somewhere in between (Moncrieff, 1999). A strength of emergent strategy is that it allows organisations to act in real time. Organisations realise they cannot know everything and therefore act as reality evolves before them. This type of strategy allows senior management to let go of some of the organisational control by understanding that the employees are seeing the everyday activities and are better equipped to shape strategy than a traditional top down approach (Faulkner, 2002). However, an emergent strategy will not work in every context. This is especially so in industries where a large amount of capital has to be invested up front into a business activity, with the motoring industry as an example. A farther weakness of emergent strategy is related to the assumption that management will give up decision making and responsibility to their subordinates, in order to be more adaptable. However, in practice, managers find this threatening and therefore not become as flexible and adaptable as they could be. Also, it can be argued that management would need to create a clear vision and culture for the organisation, in order to create a suitable environment for employees to feel they have purpose and objectives. In conclusion, Bhide (1986) has successfully demonstrated the need for emergent strategy in financial services organisations by logically dismissing the alternative prescriptive approach. In an industry where competitive advantage is said to be non-existent due to low barriers to entry and imitable products, financial institutions have found a way to be different, in their execution. The assumptions of the article are realistic as strategists have long concurred that the business environment is fast-paced and organisations must learn to adapt to it. Overall, Bhide (1986) argues that financial services organisations should select the best hustlers to constantly challenge the vision of the organisation by finding new and better ways of doing things. The organisation must allow this change to occur in order to learn and evolve, without this they will become static and uncompetitive.